BigBallinStalin wrote:PLAYER57832 wrote:thegreekdog wrote:PLAYER57832 wrote:No, I was referring to investors, particularly the bigger investors. And that is pretty clear from the context. Someone like myself pretty much has to do my own research or I wind up paying an "expert" more than what I would make in any profit. The big guys hire people to do that for them.. and they are able to put down enough to get significant return just by basically "playing their money". They select good managers. They are in a position to do more with their money, because they have more, not because they "work harder".
Yes, you're right, you were referring to investors. Sorry about that.
As for CEO salaries, I believe BBS is correct (that they are paid based on the market, and not based on merit). That being said, I remain shocked by what the market has determined is a fair CEO salary.
The problem is its an isolated "CEO market" and based on investor/stockholder needs, not long term company needs. This is why I say its not really and truly market based. Its not based on our overall economy, overall consumer market. And, that, I would say is part of the problem.
Again, people who head companies are not stupid, DO work hard. The question is not whether they deserve more than the average workers.. they DO! The question is whether they deserve 20 times as much as someone heading a company 30 years ago did. I have to go, cannot dig up the numbers this instant, but I am thinking I heard it said that some CEOS are making 100 times what could be reasonably expected just a generation ago, even adjusted for inflation. THAT gets hard to justify, in my book.
Also, though this gets into another topic, while I think CEOs deserve a lot of money, I ALSO think that researches and those who truly work to move the company forward in real and physical ways deserve more compensation in many cases (more than they get now, not necessarily more than the CEO.. though I am not going to discount the possibility that perhaps some researches might actually deserve to be paid more than a CEO, in some cases). But, they don't get it because so many at the top, plus investors all have to get their piece. Yet, those investors can just pick up and go elsewhere.. the worker cannot. In a sense, they sort of hold the worker to a kind of blackmail.. either we get paid 2% more or we leave, more the business elsewhere. This changes incentives in very bad ways.. bad for companies, bad for our economy. (but again, this is getting into another topic entirely).
What's a fair price? How should prices be set so that one "truly" deserves such a price?
"fair???" Sorry, but "fair" is for kindergarteners.
There is nothing "fair' about a few people makig 1000000 times more than others, who might even be working much harder, doing more for society, etc. BUT... that only matters when folks try to claim our current system IS "fair". "Fairness" is just not a true part of life.
However, the question was about the market. Right now, the cost/benefit ratio has too little to do with production of products and provision of real services. Equity firms, for example, don't really "care" what product is being made. There is absolutely nothing in that money stream that make them really worry about whether the product is truly beneficial to society, whether the operation is destructive or something that will advance our country, etc. You can sort of make the same argument for ALL business, but there is a big, BIG difference which I highlighted earlier. If you even just have to live next to a company you run, for example, you are going to care a bit more about everything from nasty smells to certainly toxics coming into your yard. What those connections are removed, it becomes just too easy for even decent people to find they are actually supporting pretty nasty stuff. Less than nice people, well.... can REALLY take advantage.
Similarly, when you at least tie the salary of a CEO to the actual production, hiring levels and such of a company (that is, if the company has to downsize, then the CEO salary ought to be "downsized", not increased), and such, then you see different behavior than we do today. IF you add in other types of responsibility, such as not just simply complying with basic environmental laws, but even going beyond the requiremets a bit when prudent, then you see yet different behavior. (some companies have been built on that ethos, but they can also be taken over and the culture changed in an instant because someone else just cares about making money).
so much of today is based on the idea that as long as its making money, its OK... and well, it just truly is not always OK. Many times JUST looking at making money and ignoring how is very, very bad. That is, of course true in criminality, but it is also true in things we have come to accept as a society because, well.... we have been convinced we don't have an option. I think it was Nightstrike who claimed that if companies were forced to truly respect the environment, pay for damages they cause to others there would be no industry. My response was "wrong, there would be innovation to protect the environment, reduce damage" much more. Now, a pure system is impossible. However, our system has gotten heavily skewed away from things that benefit society as a whole, to things that benefit an increasingly small few at the top. That is a classic indicator of a society about to fail.
Listening to a lot of younger economists and conservatives speak, you would think that our vast natural resources had nothing at all to do with our success. Yet, they ARE why we are where we are, very fundamentally. So, to be simplistic about it, destroying that basis is going to harm us very directly.